Last month, a jury in the U.S. District Court for the Northern District of California entered a verdict awarding $8 million in damages to the former general counsel (Sanford Wadler) of Bio-Rad Laboratories, a life-sciences company headquartered in the San Francisco area.  Wadler claimed that he was wrongfully terminated and retaliated against for reporting his suspicion to an audit committee that Bio-Rad had violated the Foreign Corrupt Practices Act (FCPA).  One topic at issue was whether Wadler could use documents and information protected by attorney-client privilege to put on his case against his former employer.

The Court found that Bio-Rad waived its claim to attorney-client privilege, and therefore, the Court admitted the evidence, overruling Bio-Rad’s objection.  In its ruling, the Court noted that other items provided by Bio-Rad during the case’s discovery phase contained a presentation, a complaint, and other communications that should have been protected by the attorney-client privilege.  And, in providing these during discovery, Bio-Rad expressly waived its claim to privilege.  By doing so, this opened the door for Wadler to use otherwise privileged information that bolstered his claim at trial.

Additionally, the court noted another important takeaway.  One of the reasons Bio-Rad gave for Wadler’s employment termination was that he failed to perform his job adequately.  The Court stated that this reason created an implied waiver to the privilege.  So, even if the Court had ruled that Bio-Rad had not expressly waived privilege by offering the above discovery, the fact that Wadler was fired for failing to perform his job adequately would have been enough to overrule the objection.

If you are company management, this case should serve as a warning that in-house company counsel shouldn’t be treated differently from other potential whistleblowers.  This creates yet another reason for companies to rely more heavily on outside counsel, as their rights and position as non-employees of the company are much different.